3 Minute Gold News

A synopsis of an interview with Jim Rickards, New York Times bestselling author of The Death of Money,Currency Wars, and the newly released The New Case for Gold by Daniela Cambone at Kitco News.

PART 1

Jim is the editor of Strategic Intelligence, Chief Global Strategist for West Shore Funds, former general counsel for Long Term Capital Management, and a consultant to the U.S. Intelligence community and U.S. Department of Defense.

Topics:

The New Case for Gold
Gold in Fort Knox
Gold in the Treasury

Jim Rickards

THE NEW CASE FOR GOLD

Jim has a chapter on gold in his first book, Currency Wars, and two chapters on gold in his second book, The Death of Money.

He decided he needed to take everything he knows and everything he’s researched about gold and put it all in one place.

There are certain arguments against gold that you hear all the time and Jim was fed up with it because they’re all wrong.

Imperically, analytically, and historically wrong.

About 10% of The New Case of Gold is knocking down these arguments once and for all.

The other 90% of the book is a very positive case for having gold.

Also, there are 21st century reasons to have gold.

GOLD IN FORT KNOX

The New Case for Gold covers Jim’s view that there is $300 billion in gold being held in Fort Knox. The Fed doesn’t want to be audited because they don’t want attention drawn to this.

Gold is actually propping up the Fed.

Jim had a conversation with one of the Fed Board of Governors. He took the Fed’s bond portfolio and marked it to market, and at times, not all the time, but at times they were insolvent.

Jim said to the member of the Board of Governors that he thinks they’re broke, and the individual said, “No we’re not.”, then said, “Maybe.”, and then said, “It doesn’t matter.”

Jim was shocked. He then spoke to another insider, one with an office across the hall from Janet Yellen and Ben Bernanke (put it that way), and he was adamant that they’ve never been insolvent. Ever. Even on a mark to market basis.

Jim went back to the Fed balance sheet and there was a gold certificate that the Fed values at $42 per ounce.

At a valuation of $42 per ounce the Fed is leveraged at 3,200-to-1.

But if you take that gold and mark it to market at today’s rate of about $1,200 per ounce then that puts another $400 billion on the Fed’s balance sheet. That puts them at about 12-to-1, which is very healthy.

So gold is propping up the Fed but nobody wants to talk about it.

GOLD IN THE TREASURY

The key to this is that the U.S. Treasury has 8,000 tonnes of gold, and the Fed has a gold certificate marked at historic cost.

Jim knew the Fed got the certificate when the Treasury took the gold from the Fed, but then he took the mark-to-market value and divided it by the $42 per ounce, converted it to tonnes, and it came out to be exactly 8,000 tonnes.

How come the Treasury stopped selling gold in 1980?

From 1950 to 1980 the Treasury lost most of its gold — from 20,000 tonnes in 1950 to12,000 tonnes in 1980.

In my final week and a half of academic degree work at Simon Fraser University in Vancouver, Canada. Very much looking forward to full time art + media. Please excuse the delay while the last finals for Communications Theory and Publishing are written. New branding, music, products, commentary and website coming.

The Greek bank holiday and long lines to get a few euros for the day. Debt deals behind closed doors. The media telling us what opinions to have. China building islands in the South China Sea and claiming all the international waves. More dealing to come. More standing in line for those who owe. Who owes? There’s a long line of nations in debt and this is far from done.

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Preparing for the Fall live boutique album available on iTunes — featuring Wag the Dog, Black Swan Dive, American Pie and Gods of the Copybook Headings.

The copybooks of the early 1900s gave us all the wisdom we need. The sayings that were copied are the truths, the gods, of our world. All the empires who followed the gods of the marketplace instead have fallen, and there’s terror and slaughter when the gods of the copybook headings return. The lyrics are by Rudyard Kipling. One of my gurus.

See the bankers wave their Wall Street wands and conjure piles of paper green. Naked short selling is like betting that your neighbour’s house will burn down. But in this scenario it happens to burn down. If the bankers win then we lose the whole world as we know it. I wrote this in 2009, with a lyric “A little grease (Greece) is floating out to sea, and little pigs (Portugal, Italy, Greece and Spain) are bobbing up and down, they’ll send a storm and we’ll see, when the tide goes out who’s naked on the beach“, and it’s coming on now. The world is changing as we know it.

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.